New mortgage rules could affect what you qualify for by 20 points: OneStreet Mortgage

This yesterday from our friends at OneStreet Mortgage.

“Effective October 17, 2016, all insured homebuyers must qualify for mortgage insurance at an interest rate the greater of their contract mortgage rate or the Bank of Canada’s conventional five-year fixed posted rate. This requirement is already in place for high-ratio insured mortgages with variable interest rates or fixed interest rates with terms less than five years. What does this mean for the average household?”

More on the OneStreet Mortage blog, here.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Norm Fisher
Royal LePage Vidorra

CMHC announces new rules making it easier to purchase homes with secondary rental suites

Finally! A rule change by CMHC that actually puts less resistance on the borrower. Effective September 28, borrowers aiming to purchase properties with legal, secondary suites, will have a bit of a boost qualifying for their purchase.

A release from CMHC said, “Many municipalities across the country now formally recognize secondary rental suites as a source of affordable housing. Rents in secondary rental suites are often lower than those for apartments in purpose-built rental buildings.”

These changes will allow homeowners to count more of the income from a property’s secondary unit when qualifying for a loan. Previously, 50% of a secondary unit’s rental income would be eligible to use for qualification. Canada’s largest mortgage insurer has now indicated that they will consider up to 100 percent of the gross rental income from (the subject property of a loan application) two-unit, owner-occupied properties.

CMHC has suggested this would target two unit owner-occupied homes and would likely include basement rental units, in-law apartments and garden suites known as laneway homes. They generally classify secondary units as “self-contained with separate kitchen, sleeping and bathroom facilities.”

The legality of the secondary suite is a key component. CMHC only recognizes units that are legal or conform to local municipal standards. The Crown Corporation says that it’s up to lenders to exercise judgment, when it comes to borrowers proving the units are legal.

Homeowners with less than a 20 per cent down payment and borrowing from a regulated financial institution must get government backed mortgage default insurance. Even financial institutions not regulated by Ottawa, like credit unions, must abide by CMHC rules to be covered by the government backing.

Questions? Call me at 306-341-3539. I’ll be happy to help.

Tawny Bley
OneSt Mortgage (Assoc #316137)

Home ownership gets slightly more expensive May 1, 2014 (for some)

riel_200As you may have already heard, home buyers without a 20% down payment, will soon be paying more to buy a house. As of May 1st, 2014 the standard CMHC mortgage insurance premiums will be increased by an average of 15%. This is the first rate hike to premiums since 1998.

With an average home price hovering around $300,000 in SK, the current insurance premium with 5% down is 2.75% or $7,837.50. Once the changes take effect this will become 3.15% or $8,977.50. A difference of $1140, or roughly $5 per month on a standard 25 year mortgage payment.

The two other private insurers (Genworth and Canada Guaranty) have also followed suit and will be charging the same premiums as of May 1st. A full list of all changes can be found here:

So what can we as home buyers do to combat this fee? I have two tips to help you ease the pain of these recent changes:

Make sure your financing has been submitted for approval prior to May 1st. As long as you make an offer and your bank/lender submits the file prior to May 1st, you can move in months later and the new premiums will not apply. I know this is a little unrealistic being that we are only days away from these recent changes but it is the most immediate solution.

Offset the expense with a better mortgage rate (you knew this was coming). Again, based on $300,000, a .10% difference in your mortgage rate, you will save roughly $1400 over the course of a standard 5 year term.

All in all, if you qualify to buy a home today, the changes should not impact your ability to purchase the same home after May 1st. Debt ratios will remain almost identical with the $5 per month increase to a mortgage payment so although these are higher costs, don’t expect them to change anything in the housing market.

Please free to send me an email, text, or call anytime. I am always happy to help home buyers with any questions they may have, strategize over future plans or save you money on your mortgage!

Riel Syrenne
TMG The Mortgage Group

CMHC announces premium increases effective May 1, 2014

CMHC announced changes to the insurance premiums paid by borrowers on high ratio loans and we wanted to share an update to keep you all informed.

Excerpted from the CMHC press release, any emphasis is ours:

CMHC to Increase Mortgage Insurance Premiums

“OTTAWA, February 28, 2014 — Following the annual review of its insurance products and capital requirements, CMHC will increase its mortgage loan insurance premiums for homeowner and 1 – 4 unit rental properties effective May 1, 2014.

The increase applies to mortgage loan insurance premiums for owner occupied, self-employed and 1-to-4 unit rental properties, including low-ratio refinance premiums. This does not apply to mortgages currently insured by CMHC.”

“For the average Canadian homebuyer requiring CMHC insured financing, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment. This is not expected to have a material impact on the housing market.

Effective May 1st, CMHC Purchase (owner occupied 1 – 4 unit) mortgage insurance premiums will increase by approximately 15%, on average, for all loan-to-value ranges.

Loan-to-Value Ratio Standard Premium (Current) Standard Premium (Effective May 1st, 2014)

  • Up to and including 65% 0.50% 0.60%
  • Up to and including 75% 0.65% 0.75%
  • Up to and including 80% 1.00% 1.25%
  • Up to and including 85% 1.75% 1.80%
  • Up to and including 90% 2.00% 2.40%
  • Up to and including 95% 2.75% 3.15%
  • 90.01% to 95% – Non-Traditional Down Payment 2.90% 3.35%

CMHC reviews its premiums on an annual basis and, going forward, plans to announce decisions on premiums in the first quarter of each year. The homeowner premium increase follows changes CMHC made to its portfolio insurance product earlier this year.”

See the complete new release here.

Please call us today for a complimentary pre-approval including a rate hold at today’s best rates, and a mortgage commitment using CMHC’s current premiums.

Tawny Bley and Tyler Hildebrand
Mortgage Associates
Sky Financial Corporation